The Blockchain and the Marijuana Industry
As of the writing of this article, eight states have legalized marijuana use recreationally, while over 20 have legalized marijuana medically. That means that more than half the states in the union have passed some form of marijuana legalization. However, Federal law still classifies marijuana as a Schedule 1 drug, which makes doing business with such establishments very risky. For instance, the Federal government could at any time raid, seize and freeze the cash assets of marijuana businesses. They may also penalize businesses, such as banks, for doing business with otherwise legal marijuana dispensaries. Therefore, the marijuana industry has no choice but to use the blockchain to protect their state-legal business.
US Constitution and State Powers
It is common knowledge that the US Constitution protects individual liberties. What is not so well known is the power the Constitution gives to individual states. The 10th amendment says, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the States respectively, or to the people.”
This amendment gave a lot of power to what states could do within their borders. For example, each state could have its own tax laws, business laws, and laws regulating society. The most extreme case of testing state powers led to the civil war. Will state efforts of legalizing marijuana lead to a similar fate? It is highly unlikely because marijuana legalization is actually a good thing, while slavery is not.
The Supreme Court, in Gonzalez vs. Reich (2005), ruled that federal law is superior to state law regarding the regulation of marijuana. There have also been many instances of Jeff Sessions threatening states that have legalized the miracle plant. But there are efforts to convince the federal government to reclassify marijuana in order to conduct more scientific research. For example, the American Legion just concluded a survey of US military veterans regarding medicinal marijuana. The survey’s results overwhelmingly called for the support of legalizing medical cannabis at the federal level.
The Trump administration has been threatening a crackdown on legal weed since they first took office. However, they also recognize the seriousness of the Opioid Epidemic. One cannot be for solving the opioid epidemic but also be against the legalization of cannabis. Especially that research has shown that Medical cannabis can eradicate the epidemic.
As we can see, the battle for changing federal law regarding legal weed is not an easy one. In the meantime, the marijuana industry should start using blockchain technology to protect their operations and investments.
In a nutshell, and sparing you pages of explanation, the blockchain is a system of decentralized authentication. It first started out as a means to authenticate payments without going through a 3rd party. But now there are countless of Initial Coin Offerings (ICO), each creating their own cryptocurrency. Furthermore, smart-contracts, which is a new application of the blockchain, will also see implementation in real-estate , digital marketing, and advertising very soon.
That said, marijuana businesses can use blockchain technology as a system for storing cash and regulating relationships. In other words, they can use the blockchain for the implementation of both cryptocurrency and smart-contracts.
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Marijuana and Cryptocurrency
Since banks have been reluctant to work with marijuana businesses, many opportunists are creating cryptocurrencies to serve the industry. That means there is no need to work with a traditional bank. All the business needs is a cryptocurrency wallet, which will be a system capable of authentication and storage of currency. No more mass amounts of cash needing services for protection, authentication, transportation, and storage –making the operations safer and more profitable.
Smart-contracts and Marijuana
The marijuana industry is about to become very regulated. States like California are requiring systems that will track everything from planting, transporting and selling. Smart-contracts using blockchain technology will make the implementation of such systems feasible. Companies realizing this need have already launched ICOs, and we can expect to see more very soon.